AP high court orders discoms to clear arrears of Rs 1450 cr of renewable power producers.

Source – hindustantimes.com

The Andhra Pradesh high court on Friday directed state-run power distribution companies to pay Rs 1,450 crore to solar and wind power producers towards arrears to be paid to them for the power supplied by them.

A division bench of the high court comprising chief justice JK Maheshwari and justice Venkata Ramana issued interim orders on a petition filed by various renewable energy developers.

These developers had said that the state government had not been paying their dues for the power supplied to the discoms in the past.

The bench directed the discoms to make the payment to these power producers within four weeks.

The producers brought to the notice of the high court that despite the court orders, the discoms had not been purchasing power and clearing their previous dues.

The renewable energy producers have been opposing the decision of the YSR Congress Party government’s decision to review their power purchase agreements (PPAs) on the pretext that the agreements smacked of huge corruption, resulting in a loss of over Rs 2,200 crore to the state exchequer.

Within a few days, chief minister YS Jaganmohan Reddy appointed a cabinet sub-committee headed by finance minister B Rajendranath Reddy to review the agreements and renegotiate with the power producers to bring down their tariff.

However, the decision snowballed into a major controversy with the National Democratic Alliance (NDA) government at the Centre intervening and asking the state government to revoke the decision.

On July 9, Union minister of state (independent charge) for power and renewable energy RK Singh wrote to the chief minister warning that revisiting PPAs would halt the flow of foreign investments in the sector, which is very important for India for environmental and power needs.

The Union minister, however, virtually ruled out irregularities in signing the PPAs and attached documents pertaining to bidding by the power producers. He pointed out that the tariffs were fixed by the Central Electricity Regulatory Commission at the national level and the State Electricity Regulatory Commission in respective states.

Credit rating agency CRISIL also warned that Jagan’s controversial plan to review PPAs could bring 5.2 gigawatts (GW) solar and wind energy projects with an estimated debt exposure of over Rs 21,000 crore under stress.

The power producers later moved the high court, which after hearing the arguments from both the sides, quashed the government’s order appointing a committee to review the PPAs. It asked the power producers to approach the AP Electricity Regulatory Commission (APERC).

The high court directed the discoms to continue power purchase from them at a tariff of Rs 2.43 paise per unit for wind power and Rs 2.44 paise for solar power till the disposal of the matter by APERC.

It has also directed the state to avoid curtailing generation from Renew Power plants without issuing any prior notice.